The Reserve Bank Says Public Protector Mkhwebane's Recommendations Are Unlawful

"The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency."

The South African Reserve Bank will approach the courts to have the public protector's recommendations on the Bankorp lifeboat investigation set aside.

The SARB said it has consulted its legal team and has been advised that the remedial action prescribed by Public Protector Busisiwe Mkhwebane falls "outside her powers" and is "unlawful".

"The Reserve Bank has been advised to bring urgent review proceedings to have the remedial action set aside ... and has resolved to do so. The Reserve Bank will address its other concerns with the report and evidential factual inaccuracies therein at the appropriate time," the institution said in a statement.

After Mkhwebane released her report on the alleged failure to recover misappropriated funds from Absa, she ordered remedial action directing Parliament to evoke a constitutional amendment to the Reserve Bank's powers.

She is recommending that section 224.1 of constitution be changed from: "The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic" to: "The primary object of the Sarb is to promote balanced and sustainable economic growth in the Republic, while ensuring that the socio-economic well-being of the citizens are protected."

Mkhwebane also wants the government to recover more than R1 billion in alleged misappropriated public funds awarded to Absa in a series of apartheid-era bailouts.

This had an immediate and negative impact on the markets and the exchange rate.

"The amendment would, if effected, strip the Reserve Bank of its key competency to protect the value of the currency and the well understood role that central banks play in securing price stability. The remedial action proposed will have a negative impact on the independence of the Reserve Bank," the Sarb said.